Correlation Between New York and HG Holdings

Can any of the company-specific risk be diversified away by investing in both New York and HG Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining New York and HG Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between New York Mortgage and HG Holdings, you can compare the effects of market volatilities on New York and HG Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in New York with a short position of HG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of New York and HG Holdings.

Diversification Opportunities for New York and HG Holdings

-0.48

Correlation Coefficient

New York  HG Holdings

Very good diversification

The 3 months correlation between New and STLY is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding New York Mortgage and HG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HG Holdings and New York is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on New York Mortgage are associated (or correlated) with HG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HG Holdings has no effect on the direction of New York i.e., New York and HG Holdings go up and down completely randomly.

Pair Corralation between New York and HG Holdings

If you would invest  720.00  in HG Holdings on September 17, 2024 and sell it today you would earn a total of  0.00  from holding HG Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

New York Mortgage  vs.  HG Holdings

New York Mortgage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New York Mortgage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, New York is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

HG Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HG Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, HG Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with New York and HG Holdings

The main advantage of trading using opposite New York and HG Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New York position performs unexpectedly, HG Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in HG Holdings will offset losses from the drop in HG Holdings' long position.

The idea behind New York Mortgage and HG Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.